Coal Producers Remain Confident Despite Dip in Coal Price

An employee walks between front-end loaders, which are used to move coal imported from North Korea, at Dandong port in the Chinese border city of Dandong, Liaoning province. (Reuters Photo)

By : Rangga Prakoso | on 4:38 PM March 08, 2017
Category : Business, Commodities

Jakarta. Indonesia's benchmark coal price inched down 1.7 percent in March, as Chinese coal miners have cranked up their production and demand has dropped now that the peak of the winter season is over.

Ministry of Energy and Mineral Resources on Tuesday (07/03) set its coal reference price (HBA) at $81.9 per metric ton in March, from $83.2 per metric ton in February. This was the third consecutive month the coal benchmark price has dropped. The HBA is the price cited for the delivery period of March 1-31.

The coal reference price is derived from the average of four general coal price indexes used in the coal trade: Indonesia Coal Index, Platts Index, New Castle Export Index and New Castle Global Coal Index.

"The peak of the world coal demand has passed as winter ended. Secondly, China's coal miners returned to their normal working days," Ministry of Energy and Mineral Resources spokesman Sujatmiko said, referring to the Chinese government's rule allowing miners to operate 276 to 330 days from November through March. This was aimed at easing its previous rule that limited the working days to five days a week and was designed to avoid oversupply from the country's coal mines.

However, Indonesian producers remained confident that the coal price would not return to its low level of $50 per metric ton as seen in February last year.

Hendra Sinadia, deputy executive director at Indonesia Coal Mining Association, or APBI, said local producers now plan to produce 470 million metric tons of coal this year, up 8.2 percent from last year, hoping to capitalize on the higher price.

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